Cash out refi vs mortgage on a property?

[Nick Zias]

Hello Everyone, So I was thinking about something this morning and maybe I am drawing a blank. (The following scenarios are for rental properties.) Scenario 1: Lets say you find a house that you want to purchase for 100K and do some repairs to it. If you have the 100k you could buy it cash, add value and then use a cash out refi to go buy another property. Scenario 2: You could take a mortgage out on that same house with a 20% down payment, then just use the 80k you have from not buying the house 100% cash and go make a downpayment on another property. In both situations you have a loan that has to be paid back. So how does using a cash out refi benefit someone? Once you use that cash out refi you are essentially taking a loan out on the house and now your monthly rental income will take a hit. So why not just take out a mortgage to begin with?